Moving to the goal of a circular economy

Moving to the goal of a circular economy

The first ever World Circular Economy Forum was held in Helsinki in June. (Image via
The first ever World Circular Economy Forum was held in Helsinki in June. (Image via

Asian nations can lead the global transition towards a circular economy, a regenerative system of production and consumption. There are promising developments in the region -- many governments and companies have already demonstrated their political consensus, economic dynamism, and industrial innovation as they move towards this goal.

But the region still needs the development of coherent policy frameworks to maximise the benefits of this new model.

In a circular economy, optimum use is made of our scarce resources through re-use, repair, and recycling, compared with the wasteful extractive linear system of manufacturing and consumption, in which products are disposed of quickly after use. In this sustainable model, the purchase of services, such as repair, drives growth, not the sale of new items.

Circular economies can deliver financial growth while being environmentally and socially responsible. They can dramatically cut carbon emissions, for example.

The Economic Research Institute for Asean and East Asia (Eria) has analysed circular opportunities in cities and particularly in manufacturing, the agriculture and forestry sectors across Asia. Our study finds that the adoption of circular economy principles could lead to economic growth of US$324 billion and create 1.5 million jobs in the cities and those sectors in Asia over the next 25 years.

With India, China, Southeast Asia and Central Asia driving global economic growth, and with a shift in resource use in which Asian nations turn from resource exporters into consumers, the leadership should and can come from this region.

Globally, and here in Asia, we are making progress towards circular economies. Countries with differing priorities are developing both unique and familiar solutions.

Japan in particular has been innovating since the early 1990s, as it sought to minimise its dependence on imports, and already recycles an impressive 98% of metals. It now plans to make the 5,000 gold, silver and bronze medals to be awarded at Tokyo's 2020 Olympic and Paralympic Games from discarded electronic devices, including mobile phones.

Speaking at the first ever World Circular Economy Forum held in Helsinki in June, Japan's State Minister of the environment Tadahiko Ito told delegates that in addition to being a permanent reminder of the athletes' sporting achievements, the medals were intended to "send a strong message of circular economy around the world".

Elsewhere in Asia, China, Korea and Thailand are demonstrating pragmatic approaches towards the transition.

Having struggled high levels of pollution as a result of its rapid industrialisation and immense manufacturing sector, China has introduced national fiscal, financial and investment policies to support circular development.

Clearly there is room for further improvement in China, as pollution is serious and in some areas deteriorating. However, China has also made progress in resource efficiency. It now makes more efficient use of coal in its power plants following its previous environment regulations -- the tightening of emissions standards for new generators in 2011 and the shutting down of inefficient small coal-fired power units which has started since 2007.

China has also increased the use and recycling of waste products. Its promotion of rubber tyre recycling is an outstanding example. In light of the increased waste from its rapidly expanding transport sector, the Chinese government in 2008 provided VAT exemption to all businesses that retreaded old tyres or produced rubber powder from used tyres. By 2013 more than 1,000 companies were focused on this business.

Although there are many positive developments, the region still needs to do much more to develop coherent policy frameworks that drive innovation if we want to deliver the maximum economic, environmental and social benefits. We must promote waste prevention by designing more durable products and encouraging reuse, re-manufacturing and refurbishment of materials.

Much work is needed at the government level. As we work towards these circular economy goals, we need to take a serious look at present regulations and standards which are not stringent enough. This means we must devise smart policies that maximise social and environmental benefits and translate into economic benefits. And to obtain these maximum benefits we must also twin our environmental policies with other economic instruments, with microeconomic, public procurement, tax and trade policies, and with improved information and research.

Governments must also support research and development in order to make the transition to circular economies faster and smoother. Partnerships in research, business and innovation, as well as knowledge and technology sharing are crucial. There are many opportunities for cooperation between Asia and other regions, including the Nordic countries, where a wide range of policy measures have been implemented and consumers are already engaged.

Delving deeper into the area of research, further work is needed in particular to understand potential job losses as a result of circular economies and how to compensate those who lose their jobs. As we adopt circular practices, new jobs will be created at the sector, region and micro level, but some other jobs will go. Again, lessons can be learned from Japan. In the 1990s, Japan managed to absorb workers from decommissioned incinerators into a reformed recycling sector through new skills training.

Roles of stakeholders and non-governmental actors are also crucial in this transition to a circular economy. Driven by market demand and common sense, businesses, researchers, activists and consumers accelerate the process.

Above all, innovation is key. Through further investment in circular innovation and in upscaling successful projects we can boost the global economy's resilience and support people and communities around the world.

Although there remains much to do, the steps that have already been taken are encouraging.

Production and consumption must become more resource-efficient and policy makers must create the right conditions in which a circular economy can thrive. Asian countries are ready to take a lead and show the world the transition to a circular economy is both possible and profitable.

Venkatachalam Anbumozhi is Senior Energy Economist at the Economic Research Institute for Asean and East Asia.

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